U.S. and Hong Kong (1997)

U.S. Department of State

Hong Kong Country Commercial Guide for FY 95-96

Office of the Coordinator for Business Affairs

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CHAPTER V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT

Hong Kong, with the second-highest per capita income in East Asia, offers bountiful opportunities to U.S. businesses. No tariffs and few government imposed obstacles hinder U.S. imports. The demand for capital goods and consumer goods is expanding. Some of the best prospects include computers and telecommunications equipment for the information technology needs of Hong Kong's burgeoning trading and financial offices; construction machinery for the major infrastructure projects as well as the private office and housing markets; and electric power generating equipment to meet the demands of a growing economy.

There is also potential growth for U.S. grocery line items as the number of existing and new food retail outlets continues to increase. Because of established ties and advantageous trading arrangements, most of Hong Kong's grocers traditionally looked to the United Kingdom, Europe, Australia, New Zealand and other commonwealth countries for supplies. In recent years, however, those buying habits are shifting and many American items are now available on local shelves, at highly competitive prices. The most significant and phenomenal development has been the establishment of the first U.S. style warehouse/club retail stores in Hong Kong. Grandmart, established in 1993, was the first and now has eight stores which primarily carry food (and non-food) products from the United States. Unlike most supermarket chains, there are no slotting fees, giving U.S. suppliers, big and small alike, an unprecedented advantage in gaining access to this highly competitive market. While GrandMart was the first to introduce the warehouse concept to the territory, over the past two years a variety of new players are quickly joining the local retail scene. These include Value Club, a joint venture of Wal-Mart and Charoen Pokphand Agro-Industry Co., M-Mart and U-Save. While the Hong Kong dollar is linked to the U.S. dollar at US$1.00 = HK$7.80, the recent weakening of the U.S. dollar against most world currencies has helped strengthen the competitiveness of American products here.

The Hong Kong people like new products, and will experiment with different foreign products. In the consumer market Hong Kong is definitely an international conglomerate. U.S. suppliers have been successful in Japanese supermarkets, and even Chinese grocery chains. U.S. Department of Agriculture food shows and in-store promotions also offer an excellent way for U.S. firms to offer new products to the Hong Kong markets. With ATO's service, and Hong Kong's strong economy, this is an ideal location for foreign products.

A. Best Prospects for Non-Agricultural Goods and Services

Following is a list of the non-agricultural goods and services best prospects sectors for U.S. exporters to Hong Kong:

No.		Code		Sector Description
1		CON		Construction Equipment
2		TEL		Telecommunications Equipment
3		ELP		Electric Power Systems
4		ELC		Electronic Parts/Components
5		INS		Insurance
6		DRG		Drugs and Pharmaceuticals
7		TRA		Travel and Tourism Services
8		LAB		Scientific and Analytical Equipment
9		POL		Waste Water Treatment Technologies
10		PMR		Plastic Materials and Resins
11		AIR		Aircraft and Parts
12		CSF		Computer Software
13		CPT		Computers and Peripherals
14		PGS		Printing Equipment
15		MED		Medical Equipment
16		COS		Cosmetics and Toiletries
17		CON		Building Products

Note: All Figures in U.S. Dollar millions unless otherwise indicated

1 - CONSTRUCTION EQUIPMENT (CON)

The construction industry has been the backbone of Hong Kong's economy. According to a government report, the total value of Hong Kong's construction was US$11.5 billion in 1994. The construction and property sectors together contribute to Hong Kong's GDP as much as the wholesale, retail, import and export, restaurant, and hotel sectors combined.

Public housing development, private residential and commercial development, major infrastructure projects, and the China market will continue to create demand for construction equipment for the next few years. Major infrastructure projects in Hong Kong include the US$21 billion Airport Core Program, which is half completed, and the US$15 billion railway network expansion project, which is scheduled to begin as early as 1996. Imports of construction equipment from the U.S. will continue to increase as many major U.S. brands are well known for superior quality.

				1994		1995		1996
D.		Total Market Size		300		330		360
E.		Total Local Production		0		0		0
F.		Total Exports		180		200		220
G.		Total Imports		480		530		580
H.		Total Imports from U.S.		15		30		40

The above statistics are unofficial estimates.

2 - TELECOMMUNICATIONS EQUIPMENT (TEL)

Telecommunications is one of Hong Kong's most dynamic industries. 1993 turnover (the latest figures available) reached US$4 billion, accounting for 2% of the territory's domestic product.

As a major international business center, Hong Kong can well be proud of its telecommunication infrastructure. It is the first city in the world with an entirely digital fixed network. Its fax penetration rate is second in the world in terms of fax lines per person. Its 65% telephone density is second only to Japan in Asia, and 20% of its 6 million population are pager subscribers.

Deregulation of the local telecommunications industry will provide foreign telephone service providers and equipment manufacturers with an admission ticket to this multi billion US$ telecommunication market. From July 1, 1995 onward, Hong Kong Telecom has been joined by three other newly formed consortia to provide fixed wired voice service to Hong Kong. These three consortia are together investing a total of HK$11.5 billion (US$1.44 billion) to set up their networks.

In addition to the fixed networks, the Hong Kong mobile telecommunications market is also undergoing tremendous change. The Telecommunications Authority, the body responsible for regulating the Hong Kong telecommunication market, will issue up to 6 Personal Communications Services (PCS) licenses and up to 4 Cordless Access Services (CAS) licenses in the 1.7-2.0 GHz band. A total of 14 interested parties have submitted their tenders for PCS licenses.

Demand for advanced telecommunications equipment will also increase from Mainland China, as the Chinese government recently committed to invest US$6 billion to expand and modernize the country's communications network. Hong Kong will continue to serve as an effective entrepot for sales to China. U.S.-made telecommunication facilities enjoy a good reputation for their high technological level, and U.S. telecommunication equipment manufacturers and system integrators are advised not to miss the opportunities arising in Hong Kong and China.

Most promising subsectors:
- Transmission Systems
- Switch & networking facilities
- Fiber optic cable

		1994		1995		1996
Total Market Size		3,050		3,010		3,612
Total Local Production		1,372		1,302		1,107
Total Exports		2,148		2,578		2,638
Total Imports		3,827		4,286		5,143
Total Imports from U.S.		574		643		804

The above statistics are unofficial estimates.

3 - ELECTRIC POWER SYSTEMS (ELP)

Thermal power remains the core source of electricity supply both in Hong Kong and China. Demand for thermal power generating equipment including boilers, turbines, generators, etc. will be flat in Hong Kong after the completion of the Lamma 7, 350MW coal-fired unit of Hong Kong Electric Holdings Limited, scheduled for commissioning in late 1995. However, demand for such equipment from China remains strong. China's installed generation capacity at the end of 1994 was 199 gigawatts. China is planning to increase this to 300 gigawatts by the year 2000. Estimates are that China will need to invest US$100 billion over the next ten years to ease its power shortage problems. In 1994, the market demand for power plant facilities was about US$14 billion, of which about US$3.4 billion of equipment had to be imported. This leaves plenty of room for foreign power equipment such as boilers, turbines and generator suppliers.

As most of Hong Kong's imported power equipment is re-exported to China, U.S. suppliers should target Hong Kong as part of their marketing strategy for China. Although U.S. equipment maintains only about an 8% share of the Hong Kong import market, huge demand in China still provides lots of room for U.S. suppliers.

		1994		1995		1996
Total Market Size		500		540		675
Total Local Production		0		0		0
Total Exports		1,250		1,560		1,950
Total Imports		1,750		2,100		2,625
Total Imports from U.S.		144		180		225

The above statistics are unofficial estimates.

4 - ELECTRONIC PARTS/COMPONENTS (ELC)

Although Hong Kong's electronic industry is facing strong competition from its neighboring countries, it remains Hong Kong's 2nd largest export earner, second only to clothing/textiles. In 1994, it employed 45,896 workers (10.5% of total manufacturing employment), and earned about US$7.5 billion in exports. (32.9% of Hong Kong's total domestic exports).

Hong Kong produces a large variety of sophisticated and less sophisticated finished products, including radio and television sets, MODEM, computers, printers etc. Most of the production is conducted on an original equipment manufacture (OEM) basis. Hong Kong is both a top exporter of finished electronic products, and a sizable importer of electronic parts and components, especially in the sector of computers & peripherals, telecommunications, and consumer electronics. The total market for electronic parts and components in 1995 was US$11.5 billion, expected to increase 15-20% annually over the coming three years. In 1994, Japan dominated the component market with a 29% share. China came second with a 17% share, and the U.S. was third by capturing a 11% share.

Hong Kong is gradually losing its competitive edge in price advantage to its less developed neighboring countries, such as Thailand, Indonesia, Malaysia, Philippines, and China on low-end electronic products. In order to compete, local manufacturers have re-geared their production tactics by switching to high value-added products. U.S. companies should be aware of the structural change in Hong Kong's electronic industries, as demand for high-end electronic components and parts are in great demand. China with its rising living standards is also seen as a major growth area for Hong Kong consumer products. China overtook the United States for the first time in 1993 as the largest export market for Hong Kong-made electronic goods. The large number of factories set up by Hong Kong electronic manufacturers in Southern China are the major consumers of parts and components exported by Hong Kong. The strong sales of electronics products in China have created high demand for parts and components, which China's domestic component industry can hardly satisfy.

Most promising subsectors:
- Digital monolithic integrated units
- Non-digital monolithic integrated units
- Parts & accessories for computers
- Parts & accessories for audio/video equipment
- Memory Card International Association (PCMCIA) cards, printed circuit boards

		1994		1995		1996
Total Market Size		10,560		11,515		13,818
Total Local Production		8,425		8,846		9,288
Total Exports		17,553		21,941		25,002
Total Imports		19,688		24,610		29,532
Total Imports from U.S.		2,953		3,692		4,430

The above statistics are unofficial estimates.

5- INSURANCE (INS)

Over the past few years, the insurance industry has enjoyed above average growth in Hong Kong. The market penetration of the life insurance industry remains below western standards, however, which means that the potential for growth is still great. In addition, Hong Kong's increasing role in China trade creates another rapidly expanding market for the insurance industry. Finally, the insurance industry is ideally placed to administer the proposed compulsory provident fund scheme, which will be put forth for debate by the Legislative Council in the summer of 1995.

As of October 1994, there were 228 insurance companies in Hong Kong, 40 of which were authorized to do long term business (life insurance and retirement schemes), 169 general insurance (accident, health, motor vehicle and marine insurance) and 19 composite insurance. Of these 228 insurers, a total of 103 insurers are incorporated in Hong Kong while U.K., U.S. and Bermuda have 29, 21 and 9 respectively. The rest are incorporated in 26 different countries. As of September 1994, there are a total of 15,079 retirement schemes approved by the local government. U.S. insurers may consider exploring the life insurance and retirement funds industry as these two sectors are expected to demonstrate substantial growth.

		1994		1995		1996
Total Sales		4,218		5,062		6,074
Sales by Local Firms		928		1,114		1,336
Overseas Sales by Local Firms		0		0		0
Sales by Foreign Owned Firms		3,290		3,948		4,738
Sales by U.S.-Owned Firms		1,160		1,392		1,670

The above statistics are unofficial estimates.

6 - DRUGS AND PHARMACEUTICALS (DRG)

In Hong Kong, the 1994 average annual medicine consumption of an individual was US$54. This figure will continue to increase as people become more affluent. U.S. pharmaceutical products are well regarded and welcome in Hong Kong. Pharmaceutical products are distributed through three channels: hospitals, private practitioners and over-the-counter sales. These channels occupy a distribution share of 33%, 18% and 49% respectively. There are 37 public hospitals managed by the Hospital Authority and 13 private hospitals, with a total 27,000 beds. The population is served by 7,500 doctors and 950 pharmacists. There are 1,500 drugstores in the territory. Hong Kong also re-exports a lot of pharmaceutical products to China.

		1994		1995		1996
Total Market Size		328		426		553
Total Local Production		139		153		168
Total Exports		834		934		1,046
Total Imports		1,023		1,207		1,431
Total Imports from U.S.		71		85		102

The above statistics are unofficial estimates.

7 - TRAVEL AND TOURISM SERVICES (TRA)

Hong Kong is a crowded city with a population of 6.1 million. 1994 per capita GDP was US$21,760. As Hong Kong residents become more affluent, they are traveling abroad in record numbers. Hong Kong's outbound tourism is characterized by the following two factors:

- Economic: When the economy is in a downturn, Hong Kong people will opt for shorter trips instead of long haul travel. Yet overall tourist growth will not be affected.

- Price: Hong Kong tourists are quite sensitive to price. A discount on airfare or tour package prices will usually increase the number of outbound tourists.

In recent years, emigration has been growing rapidly. According to the latest statistics, the number of emigrants in 1994 was estimated at 62,000, with the majority going to Canada. As a result, many people travel to Canada to visit their families and friends during their holidays. Many of these people are interested in visiting the U.S. on their trips to Canada.

Remarks: *The figure excludes departures to China and Macau.       #The figure is calculated by multiplying the average travel receipts generated by each foreign visitor to the U.S. by the number of departures of Hong Kong residents to the U.S.

		1994		1995		1996
* Total Outbound Travel ('000) - in terms of departures		2,798		3,134		3,510
Outbound Travel to USA ('000) - in terms of departures		188		225		270
# Travel Receipts (Millions)		240		300		375

The above statistics are unofficial estimates.

8 - SCIENTIFIC AND ANALYTICAL EQUIPMENT (LAB)

The Hong Kong government is playing a more active role in the Territory's industrial transformation process. More funding is being allocated to research and development. Under the Industrial Support Scheme, a provision of approximately HK$200 million (US$25 million) will be made available during 1995/96. This program aims to enhance the competitiveness of local manufacturing industries. More and more local manufacturers are realizing that only by gearing their production capability to hi-tech items can they effectively compete with less developed countries, such as Indonesia, Thailand, Malaysia, Vietnam. In order to upgrade their production capability, they will increase imports of advanced equipment. This should increase opportunities for U.S. firms, as demand for U.S. origin scientific and analytical instruments is high because of the reliability of these products. U.S. companies, however, face increasing challenges from Europe and Japan. They also face competition from Taiwan, Korea, and Singapore for less sophisticated machinery.

Hong Kong also serves as a window for the export of hi-tech analytical equipment to China. Market prospects have been further improved with the April 1994 dissolution of COCOM (Co-ordination Committee for Multilateral Export Controls). As such, advanced hi-tech laboratory testing equipment can now be exported to China via Hong Kong more easily.

Most promising subsectors: oscilloscopes; spectrum analyzers; instruments and apparatus for measuring/ checking electrical quantities (HS 9030)

		1994		1995		1996
Total Market Size		56		67		77
Total Local Production		14		17		18
Total Exports		126		152		179
Total Imports		168		202		238
Total Imports from U.S.		54		65		78

The above statistics are unofficial estimates.

9 - WASTE WATER TREATMENT TECHNOLOGIES (POL)

The implementation of a Water Control Zone in Hong Kong's Victoria Harbor in early 1995 has put substantial pressure on over 2,000 factories to upgrade or install waste water control equipment. The maximum fine for non-compliance with effluent standards now stands at US$25,000 for the first offence, US$50,000 for additional violations. Hong Kong's Industry Department projects that the total cost of compliance for Hong Kong factories now affected by the Water Control Zone will reach US$250 million, spread over a period of several years. This should provide excellent opportunities for U.S. firms, as U.S. technology for process controls, water quality monitoring instruments, reverse osmosis, ultrafiltration, and biological chemicals are all considered highly competitive in Hong Kong's market.

The key industries needing waste water control equipment are: Electroplating, electronics, bleaching and dyeing, and food processing. Equipment that creates a payback period for the factory resulting from saved energy, water, or raw materials will have the best chance for success in Hong Kong's waste water control equipment market.

		1994		1995		1996
Total Market Size		42		55		72
Total Local Production		7		8		12
Total Re-Exports		30		35		36
Total Imports		65		82		101
Total Imports from U.S.		18		23		27

The above statistics are unofficial estimates.

10 - PLASTIC MATERIALS AND RESINS (PMR)

Plastic raw materials produced in Hong Kong can only satisfy about 10% of local demand. The rest have to be imported, mainly from Taiwan, Japan and the U.S. The Hong Kong dollar is pegged to the U.S. dollar, so the slide of the dollar in 1995 has increased the competitiveness of U.S. products against products from other places in terms of prices. Coupled with the fact that the U.S. has high quality plastic raw materials, Hong Kong presents good potential for U.S. products. Major local end-users include factories producing toys, packaging materials, shoes, housewares and casings of electrical and electronic consumer goods. Hong Kong is a major world supplier of such consumer products, hence there are good prospects for exporting plastic raw materials to Hong Kong.

		1994		1995		1996
Total Market Size		951		1,428		1,856
Total Local Production		77		85		98
Total Exports		4,125		5,156		6,445
Total Imports		4,999		6,499		8,203
Total Imports from U.S.		552		635		730

The above statistics are unofficial estimates.

11 - AIRCRAFT AND PARTS (AIR)

Hong Kong is served by 55 airlines which operate about 1,200 direct flights in and out of Hong Kong weekly to 94 other cities. In 1994, these airlines accounted for more than 140,000 aircraft movements and brought about 27 million passengers and 1.2 million tons of cargo throughput at the Hong Kong International Airport at Kai Tak, making the Hong Kong airport one of the busiest in the world. Hong Kong's three home-based airlines own a total of 65 aircraft. Replacement and expansion needs definitely create a demand for more aircraft particularly after the new replacement airport at Chek Lap Kok becomes operational in 1997.

At present, the Hong Kong Aviation Engineering Company (HAECO) handles all aircraft maintenance at Kai Tak. It is expected that three franchisees will provide service at the new Chek Lap Kok airport. The expected increase in aircraft movements when Chek Lap Kok opens in late 1997 or early 1998 will increase the demand for aircraft parts for maintenance use.

The U.S. already maintains a 76% share of the import market for aircraft and parts, and the U.S.'s long established reputation in Hong Kong should enhance its competitiveness still further in the expanded market after 1997.

		1994		1995		1996
Total Market Size		415		478		550
Total Location Production		0		0		0
Total Exports		69		79		91
Total Imports		484		557		641
Total Imports from U.S.		369		424		488

The above statistics are unofficial estimates.

12 - COMPUTER SOFTWARE (CSF)

Hong Kong has become one of the most sophisticated software markets in the Asia-Pacific region. As an integrated manufacturing and transportation center and a center for finance, communications, design and marketing, quality computer software is indispensable to support the rapid development of this city. A rough estimate of the current software market is US$170 million, and it has been growing at an annual rate of over 20% since 1991. Since the U.S. software industry is the world's most advanced, Hong Kong end-users have a preference for U.S. origin software. This is reflected in the lion's share of the market (48%) captured by the U.S. in 1994.

Among imported software, accounting and financial software remain the most common applications. There is, however, increasing demand for CAD/CAM programs. Industry sectors such as trading, distribution and retailing also affect the growth of the local software market. Networking software for commercial organizations is also gaining significance. Other imported software for general applications, such as word-processing and database, are used extensively in Hong Kong.

Pursuant to the signing of the Sino-U.S. agreement on intellectual property rights in February 1995, enforcement task forces are being established in cities and provinces of China to control copyright and software infringements. Coupled with the removal of quotas and licensing requirements for software products, software sales through legitimate channels in Hong Kong to China are expected to expand substantially.

With US$7.5 million software imports re-directed to China in the first quarter of 1995 (representing an 80% increase over 1994), Hong Kong's role in distributing imported software products and providing service support to the Chinese market is growing.

		1994		1995		1996
Total Market Size		159		170		185
Total Local Production		35		50		60
Total Exports		95		140		185
Total Imports		219		260		310
Imports from U.S.		77		91		105

The above statistics are unofficial estimates.

13 - COMPUTERS AND PERIPHERALS (CPT)

As an international finance center and an integrated manufacturing and transportation center, Hong Kong's need for information processing has been on the rise. Meanwhile, office workers' salaries have doubled in the last ten years. This generates a huge demand for sophisticated computer equipment.

Although Hong Kong produces a wide variety of computer hardware products, major components such as central processing unit (CPU) chips, integrated circuits, disk drives, key boards and monitors are imported from around the world (principally the United States, Japan and Taiwan.) Imports in the personal computer market alone are currently estimated to be worth more than US$230 million. The latest market trend is in notebook or laptop computers with desktop-compatible features.

Although high quality U.S. brand PC's are well received in this market, price is still a major impediment to increasing sales volume. In view of that, most U.S. vendors have set up production facilities in Asia to keep product prices competitive.

With China's open door policy, China has become Hong Kong's largest computer re-export market. In 1994, over 25% of Hong Kong's total computer imports were destined there. With the majority of China's foreign investments coming from Hong Kong, the established Hong Kong linkage provides the convenience and network for expanding Hong Kong's computer re-exports.

		1994		1995		1996
Total Market Size		1,526		1,200		1,300
Total Local Production		1,975		2,320		2,400
Total Exports		5,375		6,790		7,300
Total Imports		4,926		5,670		6,200
Imports from U.S.		958		1,020		1,150

The above statistics are unofficial estimates.

14 - PRINTING EQUIPMENT (PGS)

Hong Kong's excellent telecommunications infrastructure provides local publishers and news media instantaneous information access to the world, helping to establish Hong Kong's leading position in printing and publishing in Asia. With over 4,800 printing establishments and 200 publishing houses, Hong Kong produces a wide range of printed materials. They include books, brochures, pamphlets, packaging materials, newspapers, periodicals and advertising catalogues.

Large printers in Hong Kong handle job orders from renowned publishers such as Oxford University Press, Longman and Macmillans, and specialize in printing books. Over 20 newspaper printers are now serving the 76 daily newspapers. Meanwhile, smaller establishments are self-sustaining by providing printed materials for local consumption.

Because of the escalating production costs, a number of smaller local printers are shifting their production bases to Southern China in search of more cost-effective operations. Along with this transition, Hong Kong has become a re-export center for new printing machinery to China. Total re-exports to China in this respect amounted to US$163 million in 1994. For those larger printers based in Hong Kong, they have invested substantially in high-tech machinery and equipment to expand their production capacity in order to maintain competitiveness in the world market.

In the past, the United States has not been able to dominate the local printing machinery market. In 1994, it ranked third behind Germany and Japan. However, with the market's awareness of and interest in the latest technology, which the U.S. is famous for, the United States is now in a favorable position to increase its market share.

		1994		1995		1996
Total Market Size		103		100		105
Total Local Production		58		55		55
Total Exports		205		175		180
Total Imports		250		220		230
Imports from U.S.		18		16		18

The above statistics are unofficial estimates.

15 - MEDICAL EQUIPMENT (MED)

Hong Kong's 6.1 million residents are provided with a comprehensive range of medical and health services by the public and private sectors. As such, there exists a good market for U.S. medical products, particularly high-end diagnostic equipment. Hong Kong has 37 public hospitals managed by the Hospital Authority and 13 private hospitals, with a total of 27,000 beds.

Hong Kong does not manufacture any medical equipment at all. It relies entirely on imports. And a large portion of its imports are re-exported to China. As import tariffs for medical equipment range from 25% to 40%, and an import permit is required for the China market, some companies take the risk of smuggling the equipment into China. As a result, the 1994 total exports which included re-exports to China is probably more than US$347 million, the official figure recorded by the Hong Kong government.

		1994		1995		1996
Total Market Size		73		87		104
Local Production		N/A		N/A		N/A
Total Exports		347		364		382
Total Imports		420		451		486
Total Imports from U.S.		128		140		154

The above statistics are unofficial estimates.

16 - COSMETICS AND TOILETRIES (COS)

In his budget speech in March 1993, the Financial Secretary announced the lifting of the 30% duty on cosmetics and perfumery products in Hong Kong. As a result, demand leapt upwards as Hong Kong's 9 million plus annual visitors and 3 million female population took advantage of the lower prices. The import of cosmetics rose from US$266.12 million to US$342.3 million (an increase of 28.6%) in 1993, and in 1994 imports increased another 31.4% to US$449.77 million. Hong Kong continues to remain a strategic marketing and distribution center for the beauty industry.

Research on visitor spending in 1993 conducted by the Hong Kong Tourist Association revealed that visitors spent more than US$129 million on cosmetics and a further US$47.93 million on perfumery. In 1994, the import of perfumery from the U.S. rose from US$4.38 million to US$10.83 million (an increase of 147%). U.S. skin care and color cosmetics also increased by 32% (from US$31.2 million to US$41.04 million). The statistics given below are for products such as perfumery, skin care and color cosmetics, shampoo and toiletries.

		1994		1995		1996
Total Market Size		309		339		373
Total Local Production		18		20		22
Total Exports		14		16		17
Total Re-Exports		145		159		175
Total Imports		450		495		544
Imports from the U.S.		68		75		82

The above statistics are unofficial estimates.

17 - BUILDING PRODUCTS (CON)

As a result of the on-going construction boom in Hong Kong, building products will continue to be in great demand over the next several years. The major driving forces for the escalating demand include public housing development, private residential and commercial development, infrastructure projects, and the China market.

Hong Kong relies a great deal on imports because local production is insufficient to support the US$11.5 billion construction industry. Competition is stiff in the imports market. Major players in the market include Japan, Italy, Germany, Spain, the U.K., and the U.S. U.S. products, in general, are well positioned in the market and enjoy a good reputation for their quality.

		1994		1995		1996
Total Market Size		1,050		1,150		1,250
Total Local Production		500		550		600
Total Exports		450		500		550
Total Imports		1,000		1,100		1,200
Total Imports from U.S.		50		55		60

The above statistics are unofficial estimates.

B. Best Prospects for Agricultural Products

Sector Description

Poultry
Ginseng
Oranges
Grapes
Apples
Beer and Malt
Lettuce
Prunes and Plums
Potatoes Frozen
Shell Eggs
Almonds
Wine

(All Figures in Metric Tons unless otherwise indicated)

Hong Kong is the largest export market for U.S. poultry meats. In particular, chicken wings and feet are used in traditional Chinese dishes and are extremely popular in this market. Of the 291,029 MT of poultry exports, roughly 90% are exported to China through Shenzhen and Zhuhai, where tariffs are considerably lower. This 90% includes many tons of poultry that are shipped unofficially. Domestic production of poultry meat is decreasing as new environmental legislation from the government makes it difficult for chicken farms to stay open. The Waste Disposal Bill, effective in 1996, will shut down many farms that cannot meet the new requirements.

POULTRY

		1994		1995		1996
Total Production		16,000		15,000		9,500
Total Exports*		291,029		300,000		320,000
Total Imports		533,436		640,000		700,000
Total Imports from U.S.		319,783		400,000		470,000

* Includes Re-exports

GINSENG

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		3,675		4,000		4,200
Total Imports		32,305		34,000		35,000
Total Imports from U.S.		932		1,250		1,400

ORANGES

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		17,455		18,200		19,000
Total Imports		183,802		186,000		195,000
Total Imports from U.S.		124,933		120,000		130,000

GRAPES

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		10,210		11,000		12,500
Total Imports		398,863		400,000		410,000
Total Imports from U.S.		21,082		22,000		22,900

APPLES

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		16,770		20,000		22,000
Total Imports		85,930		90,000		92,300
Total Imports from U.S.		67,692		73,000		79,200

BEER & MALT (in Kilolitres)

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		82,906		90,000		110,000
Total Imports		173,966		180,000		182,000
Total Imports from U.S.		83,527		90,000		94,000

LETTUCE

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		954		1,000		1,200
Total Imports		25,159		27,000		28,500
Total Imports from U.S.		20,978		21,000		22,000

PRUNES AND PLUMS

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		1,025		1,200		1,350
Total Imports		14,546		15,000		15,400
Total Imports from U.S.		10,503		10,200		11,000

FROZEN POTATOES

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		20		50		70
Total Imports		17,670		19,300		21,100
Total Imports from U.S.		13,734		16,460		18,000

SHELL EGGS

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		414		500		520
Total Imports		1,247,262		1,300,000		1,320,000
Total Imports from U.S.		42,266		44,600		50,000

WINE (KiLolitres)

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		393		420		500
Total Imports		4,517		5,000		5,200
Total Imports from U.S.		788		800		980

ALMONDS

		1994		1995		1996
Total Production		N/A		N/A		N/A
Total Exports		2,081		2,300		2,500
Total Imports		3,721		4,000		4,800
Total Imports from U.S.		2,972		3,200		3,850

 

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